Is Tenerife a tax free country?

Tenerife offers a very attractive tax rate within the Canary Islands Special Zone (ZAC), with a 4% Corporate Tax, instead of 30% of the general regime in the rest of Spain. Non-resident income tax is not subject to withholding on dividend distributions.



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VAT does not exist in the Canary Islands but there is a local consumer tax known as the IGIC (Impuesto General Indirecto de Canarias - Canaries General Indirect Tax) applied at several different rates.

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All residential and commercial properties in Tenerife must pay an annual tax known as 'IBI' (Impuesto sobre Bienes Inmuebles). The tax is calculated for each calendar year, but is payable between 1st May and 15th July in the following year.

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As an example, the Canaries are not part of the European VAT but instead they have a local consumer tax with a standard rate of 7% (much lower than the minimum 15% rate set by EU to each of their member states), besides this, without a doubt, the principal attraction for investors is that the region has by far the ...

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The Canary Islands are one of a group of nine territories that are part of the EU but are situated outside of Europe and known as the “outermost regions” (OMR). These territories are outside of the EU's customs and VAT regulations. Therefore, when you purchase any products in Tenerife, you do not pay VAT.

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Tenerife has been part of Spain since 1496. Tenerife is also a province of Spain and is therefore part of the European Union and belongs therefore to Europe. Tenerife is part of the most southerly islands of Europe very close to the western side of Africa.

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The Spanish Government operates 4 Free Zones: i) Ceuta and Melilla free zones ii) Cadiz Free Zone iii) Vigo Free Zone and iv) Canary Islands Free Zone. These zones offer multiple benefits including i) reduced corporate tax rate of 4% ii) reduced VAT rate of 7% iii) transfer tax exemption and iv) stamp duty exemption.

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Can you drink the tap water in Tenerife? People in the Canary Islands tend to buy bottled water because much of the tap water here is desalinated sea water – it's safe to drink but not particularly pleasant taste-wise.

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The most usual calculation of the taxable income is 1.1% of the valor catastral. The current tax rate for non residents is 19% for residents of the EU/ EEA and 24% for others.

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How much do you tip in Tenerife? This is a common question if this is your first time in Tenerife. Tipping in Tenerife is not compulsory as in other countries, but the workers usually appreciate at least 10% of the amount purchased. The tip is not included in the bill and should not be confused with the 7% IGIC.

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The equivalent to VAT in the Canary Islands is the well-known IGIC or Canary Island General Indirect Tax, generally charged at a lower rate. In the case of IGIC, the general rate of tax is just 7% compared to 21% VAT. Since 2000, the islands have had a special low tax rate for businesses operating on the islands.

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Given the proximity of the islands, the ability to travel to them is one of the biggest reasons why they have proven to be so popular with Brits. For visitors travelling from London, it would take them around four hours on average.

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The crystal-clear waters of the Atlantic Ocean around Tenerife and the Canary Islands are internationally known for their quality and temperatures of 70 degrees. Filled with a rich diversity of marine life, the island is an undersea paradise for experienced or first time divers.

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The Schengen Area includes the Atlantic islands belonging to Spain and Portugal, such as the Canaries (Tenerife, Fuerteventura, Gran Canaria, Lanzarote, La Palma, La Gomera, El Hierro and La Graciosa) and Madeira. However, most overseas regions and territories are not part of the Schengen Area.

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